Of course this does not mean that anyone who comes with a half-baked idea will succeed in this business. While it is a reality that it makes compelling business sense to outsource to India, it is equally true that it is a tough business to be in for a service provider.

So most of the companies (many of them would fall in our Category III), who entered this business thinking that they will have a share (even if that is 0.1 percent) of the pie projected by NASSCOM, had to learn the hard way that even for a small percentage, they have to fight.

In fact, that was the major reason behind the failure of many of these companies. Many small businesses were promised business from overseas clients by the vendors/integrators. A few of the contact center start-ups even decided on the product/technology not on the strength of that product/technology but on the commitment of the vendor that the latter would give them business. A few of them got business that way and did not focus on marketing at all. That is hardly a sustainable strategy.

The second major reason was that voice was perceived to be low-tech and high revenue-generating business. Most small companies entered the business with voice call centers. By doing that, they were taking two risks. One, they were entering a high cost (both capital and running) business. Two, they were trying to compete with an industry (the US call center industry) that is fairly established over the last four decades, has brands, and has set processes. The one advantage that they had—cost—carried them for some time. But as the US recession began and many of the US call center companies started coming to India, that only advantage was gone as these US companies could also offer lesser prices. In June 2000, Voice&Data urged Indian call center companies to actively seek sub contract business from US call centers. The US slowdown has closed that door. They are all here.

The third reason is a little debatable. Many feel (and the emails that Voice&Data receives from abroad supports this argument) that scaleability is a major consideration for the clients. Most small businesses started with 100 seat call centers without provision to expand easily. It was very difficult for them to convince clients about scaleability. That is attributed as another reason of the not-so-good performance by some call center companies.

While writing, two such companies in Gurgaon are already retrenching people. Another in Mumbai is on the verge of closing down.

The lesson is simple: in any business, those without commitment will fail. The contact center business is no different.